Axon Enterprise (NASDAQ: AXON) is bringing RoboCop to life

Axon Enterprise (NASDAQ: AXON)—best known for its Taser devices that can incapacitate a potential threat or fleeing suspect with a high-voltage jolt—is getting on the AI bandwagon with a slew of products that will allow law enforcement officers to augment and enhance their capabilities in the daily fight against crime. It’s a big step that evokes the futuristic world famously envisioned in the 1987 science fiction film RoboCop, and investors have been noticing.
Draft One, the centerpiece of a new suite of AI tools, uses audio and video captured by body-worn cameras to produce written police reports in seconds that can be integrated into records software provided by Axon or other third parties. Officers, who typically spend as much as 40% of their time writing the incident reviews that cover everything from traffic stops to more violent crimes, can now get back many of those hours and take care of the bureaucratic work with the click of a button.
Axon is also rolling out another AI-fueled service later this year that will allow for real-time translation between speakers of over 100 languages. The company is building out a 10-year roadmap that will mark an important evolution from being a maker of hardware like non-lethal weapons and cameras into the lucrative business of cloud computing and software-as-a-service that comes with the recurring monthly revenue that analysts love. This classic strategy has been perfected by tech giants like Apple (NYSE: AAPL) that use hardware sales to lure customers into a sticky, subscription-based software ecosystem.
While Axon executives said AI products have yet to meaningfully impact revenue and profitability, cloud service revenue grew 36% in the last quarter, just as quickly as revenue from its Taser sales. With Axon shares rising 135% over the past year—about as much as AI-darling Nvidia (NASDAQ: NVDA)—it’s clear investors think the company is on to something. Over the past five years, the stock has gained 716% compared to an 80% increase seen in the S&P 500 index.
Drone security
But that’s not all investors are salivating at, with Axon using the acquisition of airspace security firm Dedrone last year to enter the quickly growing market for drone defense that can protect airspace from emerging threats. AI is already enhancing the company’s capabilities with a number of services that can help airports detect unauthorized drones, stop drones from delivering contraband to prisons, and fight against aerial industrial espionage. The company says its detection platform has eliminated false positives by using behavior model filters, neural networks and AI-based imagery.
“Our momentum in newer categories like drones and robotics continues to accelerate,” CEO Patrick Smith told investors in the company’s latest earnings call, highlighting a recent scare that saw critical infrastructure threatened by a drone carrying an explosive device. “We’re going to see increased interest in counter drone capabilities.”
Law & Order
Smith also said a renewed emphasis on public order—combined with growing international demand for non-lethal weapons—should continue to be supportive of increased sales. Likely anticipating some fears surrounding the deployment of autonomous—or even intelligent—technology, as depicted in RoboCop nearly 40 years ago, the CEO said the company had introduced some controls to keep the AI in check and avoid bias that can make police investigations become politically charged.
“We did things like tuning down the word choice severity so that our AI writes the most boring police report it can write because it’s a human’s job to add emotion and tone to it,” he said. Axon says a double-blind study demonstrated that its Draft One technology is producing more accurate, and neutral, police reports than officer-only narratives.
Axon is promising that its AI focus will drive real change in public safety by allowing officers to work “smarter, faster, and more efficiently.” The main benefit to investors, however, will come from its efforts to link its hardware to a software ecosystem. The forthcoming RoboCop-esque features may be the most visible, but the exponential growth potential lies in the law enforcement platform that is being constructed on the backend.